Moderna, Inc. (MRNA) Earnings Call Transcript & Summary

Okay. Good morning, everyone. I'm Geoff Meacham. I'm the senior biopharma analyst here at Bank of America. I have also for my team, Alec Stranahan. And welcome to the BofA London Healthcare Conference. We have a great session for you today. We have Moderna with us. And speaking on behalf of Moderna, we have CEO, Stéphane Bancel. So the format for today is just a fireside chat. And we do have access to the Veracast technology. If you want to log in a question, I can see questions in the queue and then I can read those out as well. So with that, Stéphane, I'll turn it over to you just to kick it off with a couple of -- maybe a recap from yesterday, and we -- and Alec, I can get right into questions after that.

Great. Super. Thanks, Geoff, and thanks for having us. So good morning or good afternoon, everybody. I think a quick recap of the Annual R&D Day of Moderna, which happened yesterday. On the vaccine front, we announced positive Phase II for our CMV vaccine. We picked the dose for a Phase III 100-microgram, and we confirm the Phase III is on track to start next year. CMV is an asset we own 100%, and that we believe in the $2 billion to $5 billion annual peak sales product based on no CMV vaccine on the market. So we think it's an opportunity to have a big impact on health care. Given just in the U.S., we have 10,000 kids per year born with birth defect because their got CMV during the pregnancy. The second piece is on the COVID vaccine. I'm sure we're going to talk a lot about COVID, so I won't say too much here. We have announced that we had 25,000 participants enrolled. And for the first time, we announced the number of people who got the prime and the boost. Then we passed the 10,000 participants mark that got their boost, which is very important to time to read out interim efficacy data. We also announced that we released the full protocol of a study of Phase III online, which I think is the first year in the field. And it's very important for us in terms of transparency because we are in unprecedented times, and we need to make sure that everybody is very comfortable with the process being done to ensure the safety and the quality of the efficacy data of those important vaccines, so we can go back to having a normal life once everybody is vaccinated. The third piece was around flu. We've announced that Moderna is entering the seasonal flu business. We think flu is still a very large unmet medical need. I'm just going to quote in U.S. numbers, but millions of people getting sick every year, hundreds of thousands of hospitalizations per year. On the good year, only "10,000 deaths on a bad year, 60,000 deaths in the U.S." The vaccines that are available today are at best okay on a good year. And on the bad year, they're pretty bad in the 20% efficacy range. And we think we can do better with our mRNA technology. We've shown a very strong neutralizing antibody in the elderly on our COVID vaccine. When FDA approves 2 vaccine based on neutralizing antibody surrogate endpoint, so I think that is really important. We can combine products, so we could have a COVID boost and the seasonal flow. And because we can go very fast, if you look at the beginning of the pandemic, we went in 42 days from sequence of a virus to shipping clinical product. We can industrialize that to go down maybe even to 30 days from sequence to shipping seasonal flu, so we don't have like the old technology to guess. In February with WHO, 9 months before the seasonal flu of what happened in Australia to guess what's going to happen in Europe or in the U.S. So we think we can really make a dent in that business and really deliver a premium product that will generate a premium pricing. So that's for vaccine. On the therapeutic fronts, we are very pleased to report clinical data that we can repeat those or IV systemic formulation, and it's really important because as you know, you cannot repeat the gene therapy product because the virus that used to bring the genetic material create an immune response that is great the first time, but the second time, not so great. In our case, we show because you use lipids. We don't use virus as carriers. We use lipid that we can repeat those safely. If you repeat those pretty close in time, you get actually twice the protein produced. So there's no impact in output of protein production on the second dose. The safety profile is similar to the first dose. So we're very pleased with that. It's an important read across to our rare disease program because they used, by the same route of administration IV, the exact same lipid system, the same chemical matter to bring the nucleic information. So that was the news in terms of clinical data. We have announced 2 collaboration. One I think is really important is Vertex. It's our second deal with Vertex, $75 million upfront. It's toward gene editing. So I think it's a big strategical step forward for Moderna. As you know, so far, 23 program in development and growing, where we use mRNA to make a protein that is the therapeutic. In this case, we plan to work with Vertex to use our delivery technology because as you know, for the last 40 years, the big challenge with nucleic acid -- no, gene therapy, RNAi, mRNA and gene editing is always delivery. Moderna has actually become a delivery company. We can deliver in the muscle. We can deliver into the liver. We can deliver into tumors. We're working on the lung with Vertex. We've showed emerging new formulation system to get into white cells into the myeloid compartment. So there's a lot of things that we are doing now in terms of formulation. So we're going to use mRNA to code for the protein that are doing the gene editing. So if you use Cas9 as an example, we have not yet decided with Vertex what gene editing technology we're going to use. Vertex had done a lot of investment over the years to get access to a lot of technology. But we're going to use their money to code for those gene editing tools. So I think it's a big step forward for Moderna, with a big impact in the mid to long-term for the company growth. So with this, Geoff, I'm going to pause and I'm going to be happy to take any questions you have.

Okay. Great. Thanks for the background. I appreciate it. Yes, we attended the virtual R&D Day yesterday. It was very comprehensive. Let's first talk about COVID, I know probably the most topical for investors. One question we get a lot and I know it's tough to get into the nitty-gritty of the statistical assumptions. But when you look at other companies, Pfizer, BioNTech recently raised the number of patients allowed in their study. Is that permitted in yours? Is that something that you may be able to do as the trial is going on? If you don't, if your event rate doesn't happen as quickly as you think? Just help us with maybe the assumptions and the flexibility to scale, if needed?

Yes. So we could scale the trial if we needed to. I think -- and I want to speak with caution because I'm not part of Pfizer management team. So I don't know all the rationale for their expansion. They mentioned going into improving their minority numbers, which is very important in the U.S., given the mix of population at the census level. They indicated going into HIV patients, which were already included in our study. And so what we decided to do a few weeks ago and we mentioned that very publicly, is that we decide to slow down the tail end of the study to improve our minority numbers. Since the beginning, we are doing very good in the Latino-Latinx population. But the African-American was not high enough to our liking. It was good compared to other vaccines. Usually, if you look at other vaccines before COVID, the African-American population in the U.S. is a 3% to 5% participation in the trials, which is less than the actual census numbers for that population. And so what we decided to do is to slow down the tail end of the study. Because if you think about it, given how the study and the efficacy with that works, the last thousands of people you enroll don't fully back to interim data timing. Because the way the interim data works is people need to get a prime and a boost. And in case of Moderna, it's a month after. And when you -- if look at the protocol, we wait 2 weeks before we start counting cases to try to see the difference in Phase I, assuming efficacy between the placebo group and the active group. And so in the last few thousands, people had no impact on the timing on the readout of the interim data based on the current epidemiology, Geoff, and our team is reforecasting that almost daily using national available data. We anticipate the interim readout for the first interim in November. There is a case for October. But as I've said all along, it is unlikely. It is possible, but it is unlikely. And if the epidemiology in the U.S. was to kind of slowdown in terms of infection rate in the next few weeks, it could even potentially be pushed out into December. There's 2 big drivers to timing of readout, is the epidemiology, i.e., cases disease. And then it's the efficacy of a vaccine, which, of course, we don't know, which is why we're running a Phase III study, and nobody knows the efficacy of our vaccine. And so what we believe is based on the current IP and based on neutralizing antibody, what we believe, because we are very high neutralizing antibody in the elderly, which is not the case of our vaccines. We believe that we could have the interim data being positive in November. And we're getting ready for that because if it were to happen, we believe we could get an EUA very quickly, and I'm talking a week or 2. And we are getting ready. You might have seen the guidance from the CDC to the states to get ready for November 1 for 2 vaccines that if you look at the spec, it's the Pfizer vaccine and the Moderna vaccine. And so the team is fully ready for as early as November 1 launch. If we had an October readout, which, again, is possible but unlikely. But if it was to happen, we want to be ready. As you know, Geoff, you were on the R&D Day yesterday. But for people who were not, what we've discussed with the FDA at length is how do we get all the manufacturing chapter of the filing of an EUA and the BLA out of critical path. And so we have a very productive almost daily dialogue with the agency on the manufacturing front as we have on the clinical front. On the manufacturing front, every time we've increased the size of our manufacturing lots, we filed PPQs, documented it, filed into the IND of 1273, so the FDA has it in real time. So we're doing everything we do, and the FDA is being extremely helpful to make sure that manufacturing will not be in a critical path. So the last thing we need is that clinical interim data on efficacy because the safety board is collecting as we go, to be able to drop that into an EUA for FDA to, hopefully, very quickly, like they've done in the case of Gilead drug, give us an EUA. We anticipate the EUA will not be for the world population. We anticipate the EUA to be for population at high-risk. Our current understanding, and again, I want to be cautious because I don't control FDA, is health care workers and older people. It is not clear yet where the edge cut-off might be. And if it might be or not, age plus at least one comorbidity factor to be allowed to receive a vaccine as part of the EUA, what we anticipate if we get the efficacy without in November, is we should have, early in the new year, the ability to file the BLA and to get the BLA approved for access to anybody 18 and above.

Okay. That's a really helpful background. One of the questions we get from a lot of investors is on the safety tolerability side. And you saw the brief pause that AstraZeneca had for a safety event. I want you to kind of get your read on this, but my sort of thought is if something more acute were to occur on the safety and tolerability side, I think we would know it, just given the impact factor of all these vaccine studies, including yours. So I'm of the view that kind of no news is good news. But I just want to get kind of your read on that, maybe just about how the ongoing safety and tolerability is monitored from the DSMB.

Yes. So I mean, the first thing on the AZ trial, I think it's important that everybody understands that this happens in vaccine development. As you know, Geoff, it happens in drug development that a drug is put on hold. But in vaccine, given the participant, are healthy people, and the intent is to use vaccine once approved for elderly people, there is very, very easy triggers into the protocols to trigger a pause in the studies. And so what I think is good for everybody to know is that those safety monitoring boards, they know how to do their jobs. They are made of clinician, ATCs that do that for a living. And so I think it's good that people are comfortable in the system that's happening across the industry, is that if something questionable happens, things are put on eyes right away for an investigation. So I'm, of course, not able to comment in any way, shape or form, what happened to the AZ study because I have no data and not being of AZ. But I think it's a great news and I hope that they can restart the study in the U.S. soon because as I understand, I think it is still on hold in the U.S. So as you say, if our study was put on pause, we will be informed by the safety board. It will not be a Moderna decision. It's basically the safety board, who pick up the phone and call us and say, we are putting the entire study on hold. And of course, because we need to investigate a clinical observation that you don't know is linked on not to the vaccine. You have to stop all the sites because it was something dangerous. Of course, you could put more people at risk if nobody wants to do, not the company, not the Ethics Committee, obviously and the safety committees. And so you'll be confident that we will announce it. I don't know how we would not be able to announce it. And I anticipate that all the vaccine manufacturers are in the same position that it would be announced. Like AZ and Oxford did, you will have to do it. I don't see -- I could have the information likely, God forbid, to have happen this weekend that we're on a hold and we're not telling the world. And I think it's -- again, it's part of drug development. What is very a bit bizarre for all of us is this is business as usual for us, but it is not -- it is not business as usual for the world, given we're in a pandemic situation, which we understand. And again, it's very important for us to have full transparency in. When we slowed down the enrollment formularity, we said it. When we signed the pledge last week with our vaccine manufacturer that we will not submit for EUA or approval. And with neutralizing antibodies, but with the efficacy data, we signed that pledge, and that's what we will do as a company. And us filing the protocol yesterday, which we are pleased to see Pfizer following our lead a few hours after, I think it's a good sign that we, as Moderna, where you want to have extreme transparency, we're with, of course, to investors and analysts. But for me, we wait especially to the public, to the medical professionals because we want to make sure if this vaccine is safe and has a high efficacy as we hope and anticipate based on the data to date, we want it to be used. What would be really sad for the world is if the world is not trusting those vaccines, Moderna's and other's, if you get to a finish line, you will be really said that we works so hard, 7 days a week for already 9 months, to get those vaccine in extraordinary work on time. We have taken, in a collective way, as an industry, a lot of business risk. We have not taken safety risk at no time since we started this undergo.

Okay. That's really helpful. I wanted to ask you before I turn it over to Alec for a few questions. Just on the 60% efficacy threshold that you guys have, obviously, FDA has put the market 50%. Just given the -- obviously, the need for a vaccine, I wanted to assess maybe the potential for having something below 60% or even 50%, but still in certain subgroups looking good. So in other words, when you have -- looking at the totality of your data, if you have in the subgroups that probably need it the most, patients with comorbidities and patients, say, 70 years old, if your threshold is 60% there but lower than that and others, is that still, in your view, a positive result?

Yes. I mean, the FDA has set very clear guidelines, as you said, Geoff, the 50% bar. When you have nothing, a 50% efficacy in vaccine is a good thing because you can really start to slow down the spread of the virus and spread of potential infections. And so I think what is important to note is because of the size of the study at 30,000 people, there are so many subgroups. We have cut off by age, of course, because we know the age of everybody. By comorbidity, we have diabetics patients. We have patients with heart failure. We will look at all that detail, and I'm sure the FDA will do the same as they always do. And what the final label and the being will be determined by the data. And so will we get an efficacy that is consistent across the board, I don't know yet. Again, we'll have to look at the data. But if in some population, you have a 70% efficacy, but in another, you have 55% efficacy, we are just having nothing. I would rather have a vaccine of 50%, 55% efficacy, let's say, in diabetic patients, if that was what the data tells us versus having no vaccine.

Okay. That's helpful. Yes, Alec, all you.

Thanks, Geoff.

Perfect. Thanks, Geoff, and thanks, Stéphane, for joining us. So one question on manufacturing, actually 2. So we've heard some discussion around distribution and storage potentially limiting vaccine availability, at least initially. So it would be great if you could sort of -- and you covered this on the R&D Day yesterday, but if you could speak to your plans around distribution, storage and how the current systems are going to facilitate that? And then, we also got a question over Veracast from an investor on the multi-dose containers. So could you sort of speak to the multi-doses and any historical precedents for that?

Yes. So let's be very clear that the Moderna vaccine and the Pfizer vaccines are very different from logistics distribution and use at the site of injection where people will get their vaccines. So let me describe ours first, and I can give you a sense for what Pfizer assets so far. So all vaccines do not have to be stored at minus 70. We have stored at a minus 20 Celsius. That is a temperature where already there are some products approved. And so it means that in all the big distributors, the McKesson of this world, the Walgreens and so on, they have minus 20 fridge -- freezer capability. It's not a special fancy freezer. It has the same temperature that you literally have at home for your ice creams and so on. For the -- what I call the last mile, which is the last 7 days, so far, we are still doing a lot of analysis to see how much we can stretch that or not without losing potency because it's important everybody understands, if you play with temperatures too hard, you impact the potency of a product, and we don't want to do that because it will impact the efficacy of our product. So we currently have data that for 7 days or the last mile, the product can be stored at 2 to5 Celsius, which is a regular fridge temperature, which, of course, there is everywhere because even products like insulin and regular vaccines are stored at that temperature. And then, we have up to 12 hours, and we're trying to also figure out that world mix, where you can stay at room temperature when you administer it and so on. So you don't have to kind of rush back to the 2 to 5 C fridge as soon as you does one person before you have somebody coming half an hour later. We' picked 10 dose vials. It's very important because it allows us in the pandemic setting, we will not do that for pandemic kind of regular commercial product. But for pandemic setting, where the world is so waiting for vaccines, because of the vial filling capacity in the world, because if you think about it, most vaccines are 2-dose vaccines. 7 billion people on the planet, that's 14 billion doses that need to be made. There was not $40 billion of vial-filling capacity sitting on the sideline at Catalent or someone is waiting for pandemic to happen. And people still have to put in bags cancer product and insulin product and so on because people, if not, will die of those disease. And so what we said with the team is to kind of find a size that we thought was appropriate. We talked to quite a number of governments and doctors, and everybody said, infectious disease expert, 10 dose per vial for pandemic is perfect. Especially if you can -- our system does not need dilution, which is another big difference with Pfizer, where they need the dilution on site. For us, it's easy. If you have a vile with 10 dose, you put a sterile syringe in it. You pull the dose, you inject it into somebody's arm based on the device, like the DNA vaccine technology, you put a band-aid and next one. So if you have 10 people, you can vaccinate them like literally one after the other right away. If you have 2 people because you are a small doctor of pharmacy, you do your vaccination. And then you put the 8 dose left back into a 2 to 5 C fridge, and you can take it down 2 hours after or the next day to go back and pull as many dose as you need. There is no risk of quality because when you do dilution, you can make mistakes. And it's really important because if you make mistake the wrong way, you might have safety issue of tox. And if you look at the Pfizer vaccine, if you remember the Phase I data, their Phase III dose is 30-microgram. But the 100-microgram dose was not well tolerated. So if you make too much dilution, the problem you will have is the vaccine is not going to be very efficacious because you get a very little mass versus the 30 microgram you're supposed to get. If you do not enough, you might have a safety issue on the vaccine. So we have none of that with the Moderna vaccine. So that's a bit -- I hope it answers your question, Alec.